The Bank of Ghana (BoG) has opted to hold the policy rate steady at 27%, a decision born from a cautious assessment of the current economic landscape. This announcement, delivered during the first Monetary Policy Committee (MPC) press briefing of 2025 at the Bank’s new headquarters, reflects the ongoing battle against persistent inflationary pressures.
“The inflation profile remains elevated, largely driven by food price movements,” Governor Dr. Ernest Addison acknowledged, highlighting the significant impact of adverse weather conditions on agricultural production. Dry spells and a delayed onset of rains disrupted food supply chains, contributing to soaring food prices and pushing inflation to 23.8% at the end of 2024—a stark deviation from the targeted 15%.
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This stubborn inflation, driven primarily by supply-side shocks, presents a formidable challenge. While the BoG remains committed to bringing inflation back within its target range of 8% ± 2%, the path to disinflation is expected to be longer than initially anticipated.
“The Bank’s latest inflation forecast shows a steady decline and a return to the path of disinflation,” Dr Addison explained, emphasising the critical role of fiscal discipline in achieving this goal. The upcoming 2025 budget statement, under the new administration’s economic policy agenda, will be crucial in determining the pace of fiscal consolidation and ultimately, the trajectory of inflation.
Despite the challenges, the BoG remains optimistic about the long-term outlook. By maintaining a vigilant stance and closely monitoring economic developments, the central bank aims to guide the economy back to a path of sustainable growth and price stability.
